How is marginal product calculated?

• A. Output divided by labor
• B. Change in output divided by change in labor
• C. Labor divided by output
• D. Change in labor divided by change in output

Answer: (B)

Marginal product is about the extra output you get from adding one more unit of input, in this case one more unit of labor. It’s calculated as the change in output divided by the change in labor (ΔQ/ΔL). That ratio effectively measures the slope of the total product of labor: how steeply output rises as you hire more workers.

For example, if output increases from 100 to 120 when you add 2 workers, the marginal product is (120 − 100) / (2) = 10 units per worker.

The other ways of forming ratios don’t capture the additional output per new worker: output divided by labor gives average product, not the extra per unit; labor divided by output is the inverse; and change in labor divided by change in output would tell you how many workers correspond to a unit change in output, not the extra output from each additional worker.